TIDMCEG TIDMPRD
RNS Number : 2067K
Challenger Energy Group PLC
20 December 2022
20 December 2022
Challenger Energy Group PLC
("Challenger Energy" or the "Company")
Heads of Terms for the Sale of Cory Moruga; future EOR
collaboration and
settlement agreement with Predator Oil & Gas Holdings
Plc
Challenger Energy (AIM: CEG), the Caribbean and Americas focused
oil and gas company, with oil production, appraisal, development
and exploration assets across the region, is pleased to announce
that it has entered into a binding heads of terms (the "Term
Sheet") with Predator Oil & Gas Holdings Plc and relevant
subsidiary entities ("Predator"), providing for (i) the conditional
sale of the Company's interest in the non-producing Cory Moruga
licence in Trinidad, (ii) a framework for future CO(2)
collaboration between the Company and Predator, and (iii) a
mutually agreed settlement in relation to all matters relating to
the Inniss-Trinity CO(2) enhanced oil recovery ("EOR") pilot
project previously carried out by Predator at the Company's
Inniss-Trinity block (in aggregate, the "Transaction").
Highlights
-- Binding heads of terms signed for the conditional sale of
CEG's 83.8% interest in the non-producing Cory Moruga licence in
Trinidad, including the Snowcap oil field, to Predator, by way of
sale of 100% of the issued share capital of T-Rex Resources
(Trinidad) Limited, with r etention of 25% future back-in right
based on future drilling / EOR activity and associated future
production
-- Up to US$9m aggregate value proposition for Challenger
Energy, comprising US$2m in staged cash consideration, US$1m in
contingent cash consideration, removal of all liabilities and
potential exposures associated with the Cory Moruga licence,
retention of residual back-in rights, and a full settlement with
Predator in respect of all matters relating to the Inniss-Trinity
CO(2) EOR pilot project
About Cory Moruga and Transaction Background
-- The Cory Moruga licence is a direct licence from the
Trinidadian Ministry of Energy and Energy Industries ("MEEI") in
which the Company's wholly-owned subsidiary T-Rex Resources
(Trinidad) Limited ("T-Rex") holds an 83.8% operating interest,
alongside its partner Touchstone Exploration Inc. which has a
non-operating 16.2% interest.
-- The Cory Moruga licence includes the Snowcap oil discovery,
with oil previously having been produced on test from the Snowcap-1
and Snowcap-2ST wells. On the basis of the production tests, a
development plan was submitted in 2018, prior to the Company taking
control of the asset, however, the block has not been further
developed since that time.
-- Subsequent to the acquisition of Columbus Energy Resources
PLC in 2020, the Company undertook a detailed technical review of
its Trinidad portfolio and assessed that Cory Moruga field required
further appraisal before a commercial development decision could be
made. There is currently no production from the Cory Moruga
licence.
-- As a consequence of the lack of current production and the
need for further appraisal, the Company considers the Cory Moruga
licence to be non-core to its cash flow generative
production-focused business in Trinidad, and therefore no further
work has been planned for the Cory Moruga field in the near-term.
In contrast, Predator considers the Cory Moruga field to represent
an ideal candidate for a CO(2) EOR project.
-- The Company's wholly owned Trinidadian subsidiary, CEG
Inniss-Trinity Trinidad Limited, was a party to a Well
Participation Agreement (and subsequent amendments) ("WPA") with
Predator and its subsidiaries, pursuant to which Predator agreed to
carry out a CO(2) EOR pilot project in a restricted part of the
Company's Inniss-Trinity field in Trinidad. The pilot project was
carried out in 2020 and 2021, with the WPA terminated by the
Company in August 2021.
-- Following mutual discussions, the Company and Predator
consider that a broader collaboration in relation to CO(2) EOR
projects in the Company's existing portfolio of mature oil fields
across Trinidad could provide a mutually beneficial outcome for
both parties, leveraging shared past experiences utilising CO(2)
EOR techniques and methodologies.
-- The Company and Predator have therefore entered into the
binding Term Sheet, summary details of which are set out in this
announcement, to reflect the parties' strategic intent and the
agreed commercial terms between the parties in respect of the
Transaction.
Key terms of the Transaction
-- Predator will acquire 100% of the issued share capital of
T-Rex, an indirectly wholly-owned subsidiary of the Company that
holds the Company's 83.8% interest in, and is the operator of, the
Cory Moruga licence.
-- The Company will retain a "back-in right" which will afford
the Company the option in the future to repurchase 25% of
Predator's share in T-Rex (and thus representing a 20.95% interest
in the underlying Cory Moruga asset).
-- CEG and Predator have also agreed to establish a
collaboration in relation to CO(2) EOR activities and projects in
other areas in Trinidad, including but not limited to potential
application of CO(2) EOR techniques across the Company's other
fields.
-- As part of the overall Transaction, the Company (and its
relevant subsidiaries) and Predator (and its relevant
subsidiaries), without admission of fault and liability on either
party's part, have agreed to a mutual settlement and discharge of
all disputes and claims in relation to the Inniss-Trinity CO(2) EOR
pilot project previously undertaken by Predator, including the
repayment of all loans and debts owed or claimed to be owed by
either party to the other in respect of the Inniss-Trinity CO(2)
EOR pilot project.
-- The Transaction represents a gross potential value
proposition to Challenger Energy of up to US$9 million (as
estimated by the parties to the Transaction), comprising:
o US$2.0 million payable to the Company by Predator in cash, in
instalments as follows: (i) US$1 million upon completion of the
transaction (the "Completion Date"), and (ii) a further US$1
million on the date that is six months after the Completion
Date;
o a further US$1 million conditional cash payment, payable once
the Cory Moruga field production first reaches 100 barrels of oil
per day;
o the option-value embedded in the retained back-in right;
o the removal of all ongoing T-Rex financial obligations, and
the elimination of all T-Rex associated liabilities from the
Challenger Energy balance sheet, as well as the elimination of all
contingent and potential liabilities associated with the Cory
Moruga licence, whether crystalised or not;
o the settlement of any outstanding loan amounts in respect of
the Inniss-Trinity CO(2) EOR pilot project (recognising that absent
a settlement between the parties, such amounts would be recoverable
only from incremental production from the Inniss-Trinity CO(2) EOR
pilot project area); and
o a full and final mutual settlement in respect of all disputes
and claims between the parties in relation to the Inniss-Trinity
CO(2) EOR pilot.
-- In relation to the back-in right, it may be exercised at the
Company's sole election at any time in the period commencing three
years after the Completion Date or first commercial production from
Cory Moruga field (whichever is earlier) and ending six years after
the Completion Date. Consideration payable if the Company elects to
exercise the back-in right is a fixed cash amount of US$2.25
million, plus a variable percentage of the costs incurred by
Predator on the Cory Moruga field subsequent to the Completion
Date, the percentage dependent on the P50 Resource attributable to
the Cory Moruga field at that time, as follows: (i) 50% of costs
incurred if the P50 Resource is less than 5 million barrels of oil
(MMbbls), (ii) 75% of costs incurred if the P50 Resource is more
than 5 MMbbls but less than 10 MMbbls, and (iii) 100% of costs
incurred if the P50 resource exceeds 10 MMbbls.
-- Predator will have until 31 January 2023 to complete
confirmatory due diligence, prior to which time the parties will
also work in good faith to enter into long-form transaction
documentation in respect of the Transaction. However, the Term
Sheet is expressed to be legally binding, and will remain as the
operative legal document in respect of the Transaction until
long-form transaction documentation is entered into.
-- Thereafter, completion of the Transaction will be conditional
on consent of the Trinidadian Ministry of Energy and Energy
Industries ("MEEI") to a revised work programme for the Cory Moruga
licence proposed by Predator (to include technical work, CO(2) EOR
activity, and new well drilling), as well as agreement of MEEI to a
revision of future fees for the Cory Moruga licence and a
settlement / cancellation of past claimed dues and other amounts
pertaining to the Cory Moruga licence. Completion of the
Transaction will occur 7 days after satisfaction of this condition
and any other relevant conditions precedent that may be stipulated
in the long-form transaction documentation. The parties have agreed
to work together to secure the required consents and agreements
with MEEI and thus achieve completion of the Transaction as soon as
reasonably practicable on or before 30 May 2023, with a long stop
date of 31 August 2023.
-- For the year to 31 December 2021 T-Rex made a loss of
approximately TT$4.5 million (or approximately US$674,000), largely
reflective of the annual licence fees and dues in respect of the
Cory Moruga licence. As at 31 December 2021, T-Rex had net
liabilities of approximately TT$48.0 million (or approximately
US$7.1 million) of which approximately TT$31.7 million (or
approximately US$4.7 million) is intra-group and will be
written-off as at the Completion Date. Cash received in relation to
the Transaction will be used for general working capital in the
Company's operations.
Eytan Uliel, Chief Executive Officer of Challenger Energy,
said:
"I am pleased to advise of today's commercial agreement, to sell
our interest in the Cory Moruga block to Predator. Subject to
Ministry consent and agreement, Predator intend to aggressively
take the block forward to production, through a combination of new
technical studies, CO(2) enhanced oil recovery activities, and new
well drilling. In the event Predator are successful, we retain a
future ability to come back in to a 25% interest, and we have put
in place a new framework to work with Predator on considering the
application of CO(2) EOR techniques on our other Trinidadian
assets.
In financial terms, subject to completion, the transaction will
result in cash receipts of US$2 million through 2023, and a further
US$1 million in the event of commercial production being achieved
at the Cory Moruga field. In addition, we will see tangible
realisation of value in the form of the embedded option value of
the back-in right retained, all liabilities and potential
liabilities associated with the Cory Moruga entity being removed,
and a resolution of all outstanding matters between us and Predator
being achieved in an amicable manner.
It is worth noting though that whilst Cory Moruga may currently
be non-producing and thus non-core to our existing business in
Trinidad, the block does have future production potential, albeit
new wells and the application of innovative,
environmentally-friendly EOR techniques will be required to unlock
that potential. We will thus be working with Predator in the coming
months to seek the consents and agreements necessary from the
Ministry to enable the future work program intended by Predator to
proceed. This will not only be to the benefit of our Company and
Predator, but will meet the Trinidadian Government's objective of
seeing EOR deployment in Trinidadian onshore fields, with a view to
establishing the basis for new oil production in the future.
Further updates will be provided as appropriate."
---
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014, which forms part of United
Kingdom domestic law by virtue of the European Union (Withdrawal)
Act 2018 (as amended).
For further information, please contact:
Challenger Energy Group PLC Tel: +44 (0) 1624
Eytan Uliel, Chief Executive Officer 647 882
Strand Hanson Limited - Nomad Tel: +44 (0) 20 7409
Rory Murphy / James Spinney / Rob 3494
Patrick
Arden Partners plc - Broker Tel: +44 (0) 20 7614
Simon Johnson 5900
CAMARCO Tel: +44 (0) 20 3757
Billy Clegg / Hugo Liddy / Sam Morris 4980
Notes to Editors
Challenger Energy is a Caribbean and Americas focused oil and
gas company, with a range of exploration, appraisal, development
and production assets and licences, located onshore in Trinidad and
Tobago, and Suriname, and offshore in the waters of Uruguay and The
Bahamas. In Trinidad and Tobago, Challenger Energy has five (5)
producing fields, two (2) appraisal / development projects and a
prospective exploration portfolio in the South West Peninsula. In
Suriname, Challenger Energy has on onshore appraisal / development
project. Challenger Energy's exploration licences in Uruguay, the
South West Peninsula of Trinidad, and The Bahamas offer high-impact
value exposure within the overall portfolio value.
Challenger Energy is quoted on the AIM market of the London
Stock Exchange.
https://www.cegplc.com
ENDS
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
MSCBKCBBQBDDOBD
(END) Dow Jones Newswires
December 20, 2022 02:00 ET (07:00 GMT)
Challenger Energy (AQSE:CEG.GB)
Gráfica de Acción Histórica
De Nov 2024 a Dic 2024
Challenger Energy (AQSE:CEG.GB)
Gráfica de Acción Histórica
De Dic 2023 a Dic 2024
